TY - JOUR
T1 - New Keynesian Monopolistic Competition and Objective Demand
AU - Weinrich, Gerd Hellmut
PY - 2007
Y1 - 2007
N2 - The New Keynesian model of monopolistic competition by Blanchard and Kiyotaki (1987) is reformulated according to an objective demand approach making the behavior of all agents fully rational. The revised model is compared with the original model in terms of prices, quantities and welfare. Working with the revised model enhances the validity of the menu-cost argument and, different from the original model, implies that price rigidity is increasing in market concentration.
AB - The New Keynesian model of monopolistic competition by Blanchard and Kiyotaki (1987) is reformulated according to an objective demand approach making the behavior of all agents fully rational. The revised model is compared with the original model in terms of prices, quantities and welfare. Working with the revised model enhances the validity of the menu-cost argument and, different from the original model, implies that price rigidity is increasing in market concentration.
KW - New Keynesian Economics
KW - monopolistic competition
KW - objective demand
KW - New Keynesian Economics
KW - monopolistic competition
KW - objective demand
UR - http://hdl.handle.net/10807/37995
U2 - 10.1016/j.jmateco.2006.08.003
DO - 10.1016/j.jmateco.2006.08.003
M3 - Article
SN - 0304-4068
SP - 152
EP - 173
JO - Journal of Mathematical Economics
JF - Journal of Mathematical Economics
ER -